Cosco Bulk Carrier Company Ltd v Team-up Owning Company Ltd (The Saldanha)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE GROSS,Mr Justice Gross |
| Judgment Date | 11 June 2010 |
| Neutral Citation | [2010] EWHC 1340 (Comm) |
| Docket Number | Case No: 2009 FOLIO 1301 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 June 2010 |
[2010] EWHC 1340 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before : Mr Justice Gross
Case No: 2009 FOLIO 1301
Luke Parsons QC and David Lewis (instructed by Holman Fenwick Willan) for the Applicant
Andrew Baker QC and Sean O'Sullivan (instructed by Ince & Co) for the Respondent
Hearing dates: 05/02/10
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Gross :
INTRODUCTION:
The subject-matter of this case is unfortunately topical: namely, Somali pirates. In Masefield v Amlin; The Bunga Melati Dua [2010] EWHC 280 (Comm); [2010] 1 Lloyd's Rep. 509, the context was marine insurance; here the issue concerns off-hire under a time charterparty.
The question is whether detention by pirates, piracy or perhaps the effects of piracy entitled charterers to put the vessel off-hire in reliance upon that version of cl.15 of the NYPE form of charterparty agreed by the parties in the charterparty of 25 th June, 2008 (“the charterparty”).
Cl. 15 of the charterparty provided as follows:
“That in the event of the loss of time from default and/or deficiency of men including strike of Officers and/or crew or deficiency of… stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, dry-docking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost….”
(Italics added).
By its Award on Preliminary Issues dated 8 th September, 2009 (“the award”), an eminent arbitration tribunal (“the tribunal”) held unanimously that the answer to the question was “no”. From that decision the Applicants (“Charterers”) appeal.
For completeness, the tribunal also considered preliminary issues arising under other clauses of the charterparty. In summary, the tribunal held that the vessel was not off-hire under cl. 39 of the charterparty and that the war risk and insurance provisions of the charterparty did not preclude the Respondents (“Owners”) from claiming hire in respect of periods during which the vessel was under the control of pirates. There is no appeal from these determinations of the tribunal and no more need be said of them. This appeal is accordingly solely focussed on the question of off-hire under cl. 15 of the charterparty.
Reverting to the award, loss of time resulting from the seizure by pirates was not in dispute. The tribunal held that the “full working” of the vessel had been prevented by the actions of the pirates. Owners do not appeal from that decision of the tribunal. The only issue on this appeal is therefore still further narrowed: namely, whether, contrary to the decision of the tribunal, Charterers succeed in bringing themselves within one or more of the following three (italicised) causes contained in cl. 15 of the charterparty on which they seek to rely:
i) “Detention by average accidents to ship or cargo” (“Issue (I)”);
ii) “Default and/or deficiency of men” (“Issue (II)”);
iii) “Any other cause” (“Issue (III)”).
The facts, so far as relevant to this appeal, are within a short compass and may conveniently be taken from the award:
“5. The vessel is a Panamax size bulk carrier….
6. The charter was contained in a recap which provided for a charter period of 47 to 50 months at US$52,500 per day and 'otherwise as per' an earlier charter of a similar vessel 'logically amended' with certain exceptions. The earlier charter was on the NYPE form with additional clauses….The clauses we have to construe come from this earlier charter.
7. The vessel was delivered into the charter on about 5 July 2008. On 30 January 2009 Charterers gave orders to load a cargo of bulk coal in Indonesia for carriage to Koper in Slovenia. Owners responded by saying they supposed this voyage was to be via the Cape of Good Hope. When Charterers said it was to be via the Suez Canal Owners reserved their right to refuse to comply with the orders unless Charterers confirmed that they would reimburse Owners for the additional war risk premium which they would have to pay. Charterers confirmed that they would do so 'as per Charter'.
8. On 22 February 2009 the vessel was seized by Somali pirates whilst sailing through the transit corridor in the Gulf of Aden. The pirates compelled the Master to sail the vessel to the waters off the Somali town of Eyl where the vessel remained until 25 April when she was released by the pirates. She reached an equivalent position to the location at which she was seized on 2 May.
9. Charterers have refused to pay hire for the period between 22 February and 2 May. Owners claim the hire plus the cost of bunkers, additional war risk premium and crew war risk bonuses. The claim is made under the terms of the charter alternatively as a claim for an indemnity against the consequences of following orders to take the Suez route. Charterers counterclaim for damages alleging unseaworthiness because the vessel and its crew had not been properly prepared to deal with an attack by pirates. The preliminary issues are not concerned with the claim for indemnity or the counterclaim.”
Pausing here, it is worth underlining that the applicable principles are beyond argument. As is hornbook law and was clearly expressed in the award, under a time charterparty, hire is payable continuously unless charterers can bring themselves within any exceptions, the onus being on charterers to do so. Doubt as to the meaning of exceptions is to be resolved in favour of owners. Unless within the ambit of the exceptions, the risk of delay is borne by charterers. The justice of the matter is to be found in the bargain struck by the parties. Mr. Baker QC, for Owners, put it well in his skeleton argument:
“There is no relevant concept of fairness other than the contractual balance struck by the off-hire clause, construed in accordance with well-known orthodoxy.”
I turn without more ado to the three Issues, already identified.
ISSUE (I): “Detention by average accidents to ship or cargo”
For Charterers, the essence of the argument carefully developed by Mr. Parsons QC was as follows:
“…in the context of clause 15, the reference to an 'average accident' is not intended to require that there be damage to the Vessel, i.e., physical loss (that is covered elsewhere in clause 15), nor to require that there be an 'accident' as that term would be understood in an everyday sense, but to enumerate that the Vessel will be off-hire in the event of 'detention' (itself a limiting requirement…) due to fortuities which are marine perils. Piracy is a marine peril: see section 3 of the 1906 Act….”
The tribunal rejected Mr. Parsons' submissions under this heading. With respect and notwithstanding Mr. Parsons' advocacy, I have no hesitation in agreeing with the tribunal. My reasons follow.
First, in commercial law, certainty is of great importance. In The Mareva A.S. [1977] 1 Lloyd's Rep. 368, at p. 381, Kerr J (as he then was) said of this very wording that “average accident”:
“….merely means an accident which causes damage”
On any view, this incident did not result in damage to the vessel. It follows that if this dictum is correct, then the wording in question affords no assistance to Charterers. It is right that Kerr J's observation was obiter. But, as the tribunal remarked and over and above the respect due to observations of Kerr J:
“Our own experience is that in the period of almost 30 years since it was given, it has been accepted as correct, and as settling the issue of the meaning of 'average accident' in the NYPE form, both in textbooks and in arbitration. We imagine that innumerable charterparties have been made on this basis.”
I respectfully share the tribunal's understanding. In the circumstances, I agree entirely with the tribunal that it would only be right to differ from the view expressed by Kerr J if persuaded that it was clearly wrong. To the contrary, that view seems right to me as it did to the tribunal.
Secondly, I am unable to accept that, however approached, the incident can properly be described as an “accident”. Mr. Parsons submitted that although the capture of the vessel was planned in advance and deliberate, it was a fortuity so far as the crew and the vessel were concerned. In telling wording, the tribunal rejected this submission:
“We disagree that 'accident to the ship' is a natural way to describe a seizure by pirates. We cannot imagine a master telephoning or e-mailing his Owners after the seizure and saying 'there has been an accident to the ship'. He would naturally say 'the ship has been seized by pirates' or 'we have been captured by pirates'. Accident requires lack of intent by all protagonists. An obviously deliberate and violent attack is not described as an accident, no matter how unexpected it may have been to the victim. A much more specific word or phrase is put to the incident, to reflect its deliberate and violent nature.”
The tribunal recorded that other examples had been canvassed at the hearing, including hijacking and the assassination of President Kennedy. As to the latter:
“…nobody would naturally say that President Kennedy had an accident in Dallas in 1963.”
To my mind, this reasoning of the tribunal is unanswerable.
Mr. Parsons valiantly contended that, as the wording “average accident” was esoteric and not in everyday use, the tribunal's point was neutral; a master would never contact owners to say that the...
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